Postmates Pushes Back Against Mass Arbitration Tactics

App-based food delivery provider Postmates has filed a lawsuit pushing back on coordinated large-scale individual arbitration practices in a complaint against 10,356 individuals. The suit is filed in the California Central District Court. Postmates is represented by Gibson, Dunn & Crutcher. The suit comes after a judge required a similar business, DoorDash, to face over 5,000 cases of arbitration; DoorDash was also represented by Gibson Dunn.

Postmates filed the complaint “to enforce its contractual agreements with independent couriers to resolve disputes through individual arbitration, free from interference by unconstitutional state laws that impermissibly target arbitration contracts for unfavorable treatment.” Postmates has sought to hinder “abusive litigation tactics by certain plaintiffs’ attorneys who repeatedly file thousands of arbitration demands at the same time…to use the threat of massive arbitration filing fees as leverage to extract the highest possible payout from corporate defendants.” Postmates states that the individuals agreed to settle disputes via individual arbitration; it alleges that they cannot do what they are currently doing, which is effectively a class arbitration. Postmates claims that this violates their agreement.

Postmates requires independent couriers to agree to a contract, the Fleet Agreement, which is also ruled by the FAA. The agreement mandates individual arbitration. The individual defendants used Postmates to find delivery opportunities; they claim that they are complying with the agreement and that their claim is within the Mutual Arbitration Provision. They also claim that they are misclassified as independent contractors, when they should be employees. However, Postmates disagrees, arguing that these ten thousand – plus individuals should file individual arbitrations to resolve the disputes. Postmates states that as a result of Defendants’ agreement to the Mutual Arbitration Provision in the Agreement, they must individually arbitrate. 

Additionally, “these individuals initiated, through their purported counsel…a de facto class arbitration against Postmates by simultaneously filing 10,356 boilerplate arbitration demands with the American Arbitration Association (AAA) on February 15, 2020.” Postmates states that the “demands are virtually identical, assert generic claims, and seek identical forms of relief. They provide no individualized information about the work the individuals purportedly performed while using the Postmates platform.” As a result, Postmates believes that this is an effort by individuals and counsel at Keller Lenkner, who represents the Defendants, to enact mass arbitration against Postmates. Postmates criticizes Keller Lenkner’s practice that it states seeks to arbitrate individual claims in a de facto class manner and to pay arbitration fees up front and to administer arbitrations together at the same time. Postmates alleges that this “strategy is designed solely to extract a ransom-style settlement regardless of the merits of the underlying demands.” Consequently, Postmates asks the court to prevent this de facto class arbitration as Defendants agreed to individually arbitrate in the agreement. Postmates also had AAA look at this arbitration.

Postmates stated that on February 24 it received notice from AAA that its portion of the filing fees were due by March 16, and the cases would close if the payment was not received by April 15; the filing fees totaled more than $4.6 million.  AAA stated that Postmates was subject to SB 707, which states that failing to pay arbitration fees is punishable, such as waiving the right to compel arbitration.

Postmates has sought declaratory and injunctive relief. The relief would state that any attempt by the defendants to pursue a de facto class arbitration against Postmates violates their agreement and that they cannot respond by attempting to enforce CA SB 707, the newly enacted sections of the California Code of Civil Procedure, against Postmates.